What is a Down Payment?

A down payment is the portion of the home price that is not financed by the mortgage loan. The buyer must pay the down payment from his/her own funds or other eligible sources before securing a mortgage.The payment typically represents a percentage of the full purchase price. For example, typical downpayment amounts include 5%, 10%, 15%, and 20%.

The higher the downpayment amount, the lower the amount of interest paid over the lifetime of the loan, and the lower the monthly payments.

How down payments affect mortgage insurance

Buyers putting down less than 20% will be expected to pay for CMHC mortgage insurance, as a security against defaults on their mortgage payments.

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